As of 16 January 2023, first home buyers in NSW will have the option of paying either an annual property tax or stamp duty. First-home buyers who purchase properties for up to $1.5 million have an option of paying the annual property tax rather than stamp duty. Only first-home buyers who opt to pay the property tax will be responsible for paying it. This is not applicable to future property purchases.  

The cost of home purchases will be reduced through this initiative, possibly increasing the homeownership rate in NSW. The decrease in home ownership is usually seen in young and low-income demographics. Property ownership has decreased from 70% in the 1990s to about 64% in today’s market due to rising home costs.

Many purchasers face a challenge in terms of savings needed to cover expenditures of a home purchase. Removing the requirement to pay stamp duty will reduce these costs and shorten the time required for first-home buyers to save up. This is very helpful if you plan to purchase a home for the first time.

For purchases up to $800,000, there is an available stamp duty exemption for first-home buyers and this will remain in effect. On the other hand, for homes up $1.5 million, the property tax option will be available. These options will make it easier for Australians in purchasing their first home. Statistics show around 97% or 55,000 individuals will receive assistance from these measures. 

Here are the eligibility requirements:

  • You must be an individual and over 18 years old.
  • You must be an Australian Citizen or permanent resident.
  • You and your spouse must not have previously owned or co-owned a residential property in Australia and received a First Home Buyer Grant or duty concessions.
  • The property you are buying must be lesser or equal to $1.5 million.
  • You must move into the property in 12 months’ time and live in it for at least 6 months straight.
  • You must sign the contract of purchase on or after the scheme commencement date.

In the second half of 2022, the NSW Government plans to bring legislation to establish the property tax into the NSW Parliament. The property tax will be available to first-home buyers who sign a contract of purchase on or after January 16, 2023, and stamp duty payment will no longer be required. Eligible first home buyers who sign a contract of purchase between the passage of legislation and January 15, 2023, will be qualified to choose the property tax. However, these homebuyers will be obliged to pay any applicable stamp duty within the customary time frames and will be eligible to apply for and receive a stamp duty refund starting on January 16, 2023.

Do you want to know more? Micah Finance Solutions can help you choose the best option for your first home purchase. Schedule an Obligation Free Consultation with our finance specialist.